Black Investors Taking Control

Black Investors Taking Control an effort to narrow the wealth gap, Black investors can put their money to work by investing in companies that support the community. Black Americans can do this in a variety of ways. From using a robo-advisor or financial advisor to investing on their own, to using exchange-traded funds that focus on equity investment in minority-owned businesses, the options are limitless.

While a growing number of Black investors are engaging in purposeful investments, many lack access to the resources they need to make these types of investments possible. The good news is that Black American investors are eager to learn about financial topics and seek out money-management help, with a majority of respondents in a 2020 T. Rowe Price study indicating they value opportunity (such as faster investment growth) more than security (e.g., less risky investments).

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But despite this growing interest in investing, there is a real need to increase the amount of capital available for Black business owners. The number of publicly-traded, Black-owned companies is limited and funding for these companies continues to decline, as evidenced by a recent plunge in venture capital funding. The flurry of lawsuits combating strategies that use race as a criterion for investing have created a chilling effect, but solutions are still possible.

Governments, philanthropists and banks can use funding methods that pass legal scrutiny to address the disparities in equity-focused investment for Black business owners. These strategies include community ownership, place-based investment, special purpose credit programs and crowdfunding.